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The countdown to Wednesday's 3-year ECB LTRO(Longer Term Refinancing Operations) has begun..

Tuesday, February 28, 2012 4:17 AM GMT

The countdown to Wednesday's 3-year ECB  LTRO(Longer Term Refinancing Operations)  has begun and the first clues will come from how much is rolled at the weekly MRO today. As a reminder, the amount that is rolled is important, as it will provide an indication of the actual size of the 3-year LTRO beyond its headline allocation.

For example the December 3-year LTRO had a headline size of EUR 489bn but the actual net new liquidity add was euro 193.4bn due to some EUR 277bn of liquidity being shifted from shorter dated liquidity operations to the 3-year operation.

This week there are some euro 253bn of liquidity operations maturing and in addition to this we have a special 1-day operation. The allotment at the 3-year LTRO this week needs to be adjusted for how much is rolled from the maturing operations to get a better idea of the liquidity add.

It seems likely that net new liquidity will be greater than the 193.4bn that was allocated at the December 3-year LTRO.

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